Solution Manual for Financial Management for Public Health, and Not-for-Profit Organizations 7th Edition by Finkler, Calabrese & Smith Verified Chapters 1 - 15, Complete

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Solution Manual
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for Financial Management for Public Health, and Not-for-Profit
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2q Organizations 7th Edition by Finkler, Calabrese & Smith Verified
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2q Chapters 1 - 15, Complete 2q 2q 2q 2q

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Chapter 1: INTRODUCTION TO FINANCIAL MANAGEMENT 2q 2q 2q 2q 2q




Questions for Discussion 2q 2q




1-1. Financial management is the subset of management that focuses on generating financial information
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that can improve decisions. The decisions are oriented toward achieving the various goals of the
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organization while maintaining a satisfactory financial situation. Financial management encompasses the
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broad areas of accounting and finance.
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1-2. In proprietary, or for-profit, organizations, an underlying goal is to maximize the wealth of the owners
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of the organization.
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1-3. In public service organizations, decisions are oriented toward achieving the various goals of the
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organization while maintaining a satisfactory financial situation.
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1-4. Accounting is a system for keeping track of the financial status of an organization and the financial
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results of its activities. It has often been referred to as the language of business. The vocabulary used by
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accounting is the language of nonbusiness organizations as well.
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1-5. Accounting is subdivided into two major areas: managerial accounting and financial accounting.
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Managerial accounting relates to generating any financial information that managers can use to improve
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the future results of the organization. This includes techniques designed to generate any financial data that
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might help managers make more effective decisions. Major aspects of managerial accounting relate to
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making financial plans for the organization, implementing those plans, and then working to ensure that
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the plans are achieved. Some examples of managerial accounting include preparing annual operating
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budgets, generating information for use in making major investment decisions, and providing the data
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needed to decide whether to buy or lease a major piece of equipment. Financial accounting provides
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retrospective information. As events that have financial implications occur they are recorded by the
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financial accounting system. From time to time (usually monthly, quarterly, or annually), the recorded
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data are summarized and reported to interested users. The users include both internal managers and
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people outside the organization. Those outsiders include those who have lent or might lend money to the
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organization (creditors), those who might sell things to the organization (called suppliers or vendors), and
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other interested parties. These interested parties may include those with a particular interest in public
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service organizations, such as regulators, legislators, and citizens. Financial reports provide information
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on the financial status of the organization at a specific point in time, as well as reporting the past results of
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the organization‗s operations (i.e., how well it has done from a financial viewpoint).
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1-6. Finance focuses on the alternative sources and uses of the organization‗s financial resources.
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Obtaining funds when needed from appropriate sources and the deployment of resources within the
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organization fall under this heading. In addition, finance involves the financial markets (such as stock and
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bond markets) that provide a means to generating funds for organizations.
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1-7. Yes. Achieving the goals of the organization requires financial planning. Financial management
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provides information for managers to use in making their decisions. It helps managers by providing
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information on the likely financial impact of each proposed alternative. It also provides information about
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financial stability, efficiency, and effectiveness.
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1-8. Clearly, we might expect some public service organizations that are proprietary, such as some
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hospitals, to earn profits. But what about other public service organizations such as charities? They should
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make a profit as well. Profits provide a safety margin against unexpected costs, provide resources to
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replace buildings and equipment, and to expand and improve services.
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1-9.Federal government (see text Figure 1-1)
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2q Individual income taxes 2q 2q




Social insurance taxes 2q 2q




Corporate income tax
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State and local government (see text Figure 1-4)
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2q Sales and gross receipts tax 2q 2q 2q 2q




Federal government 2q




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Health sector (see text Figure 1-6)
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2q Private insurance 2q




2q Medicare

Medicaid

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Not-for-profit sector (see text) 2q 2q 2q




Private payments for goods and services 2q 2q 2q 2q 2q




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